By Michelle Burkart | #LGBTB2B
The world of supplier diversity procurement, or government contracting, is full of acronyms (i.e. abbreviations for titles, organizations, certifications) that I call “certification buzzwords.”
In our first column, we provided a listing of the “organizational buzzwords” that named the agency players. Since every industry has its own “buzz speak,” I wanted to provide some of the ones you will hear as you begin to certify your business as LGBTBE.
The first buzzword or phrase on my list is “certified business enterprise or owned.” There are different types of certifications that are for various business enterprises and populations. You can be certified in many categories as long as you meet the criteria of each certification. The advantage for having more than one certification results in the scoring of your bid during the competitive bidding process. It’s like being a five-star general instead of a two-star!
The following are a list of certification buzzwords:
Veteran-owned business (VOB)
Service Disabled Veteran-Owned (SDVOB)
Disabled Veteran Business Enterprise (DVBE)
Disadvantaged Business Enterprise (DBE)
Woman Business Enterprise (WBE)
LBGT Business Enterprise (LGBTBE)
Small Business Enterprise (SBE)
Minority Business Enterprise (MBE)
Small Local Business Enterprise (SLBE) for San Diego
Emerging Local Business Enterprise (ELBE) for San Diego
In addition, some of these designations above are “self” certifying, which means you can apply yourself. Some have to be “agency or third party certifications,” which involve being accepted and vetted by a third party such as the NGLCC for the LGBTBE, or WBENC for a WBE.
The second buzzword is “mandated spend.”
This means that an agency or corporation is “mandated to spend” a certain percentage of its procurement budget with the above designated business enterprises.
This is a way to level the playing field for small businesses to compete in the contracting process.
The state of California, for example, has a mandated spend for small business enterprises (SBE) of 20 percent of the total state contracting budget.
The CPUC and its affiliates are mandated by law AB 1678 to spend with three types of certifications, which now includes LGBTBE.
However, the percentages for LGBTBE by the CPUC affiliates are determined separately. Having a mandate is great progress for the LGBT business enterprises.
The California Department of Government Services (DGS) is mandated to spend with SBE and DVBE only.
The goal of the LGBTBE certification program is to grow the numbers of LGBT certified businesses so we can qualify for a mandated spend status on the state and the federal levels.
Since there is no federal mandate to spend with LGBTBE businesses, the federal agencies, such as the Department of Defense, are not required to do so. The NGLCC has made great strides in educating these federal agencies that it’s just good business to include our community in contracting opportunities.
The third critical buzzword to understand is “51 percent owned and operated”
If one is an SBE, this is usually a revenue generated designation of $100 million or smaller, by the Small Business Administration’s definition. With the other certifications, there is the 51 percent owned-and-operated requirement. This means that to be eligible, you have to be a 51 percent owner and operator of the day-to-day operations.
So, if you are in a business partnership with your same-sex partner, and you are married, it would be smart to assess which of you has the most certification opportunities. I suggest that the one with the most be designated the 51 percent owner. If you are married to your business partner, you can design your estate to have survivor benefits of the business so that either partner becomes 100 percent owner in the case of death of a spouse.
What if you already have your partnership established, and you have a 50/50 percent stake in the business?
Then you are not eligible to apply for the any of the above certifications except the SBE, SLBE or ELBE. You could, however, change your ownership status to a 51/49 percent split to provide for more opportunities if it is determined that your business would benefit from the change. For those partners who absolutely want to be 50/50 but you see the value of the 51/49 change, you could amend your written partnership agreement to provide for the 2 percent difference in the future sale of the company.
With a corporate ownership structure, the same decision would need to be addressed in terms of stock ownership. If you are starting a business, I suggest that you consider what certifications are available to you as part of your business formation decisions.
The SBDC Regional Network “LGBTBE certification program” provides four LET’S WORK IT! training modules to help you with the LGBTBE and all of the other certifications, to help you execute your certifications once you get it, and to provide one-on-one business consultations. There is no fee for either SBDC services, just your commitment to show up! As Mark Cuban, of “Shark Tank” fame, says, “The most important part of building a successful business is to just show up!”
—Michelle Burkart is the SDIV SBDC network program coordinator for the LGBTBE certification program, and co-founder of the Diversity Supplier Alliance. She can be reached at firstname.lastname@example.org, or email@example.com. For more information on the SDIV LGBTBE programs, visit sdivsbdc.org/lgbtbe-biz-builder.